Some cities invite lurid headlines like circus clowns attract custard pies. My home, Brighton and Hove, is such as place.

On this site last month Simon Jenkins neatly summarised the ugly blemishes that disfigure our city by the sea. Jenkins's piece was written in the hope that Brighton and Hove councillors would give Eric Pickles a black eye by holding a referendum on council tax. In the end, that possibility fizzled out in an ignominious political compromise which allowed all sides to fool themselves that they have emerged victorious from a squalid debacle.

But this week, the committee rooms in Hove's brutalist town hall witnessed the birth pangs of a monstrosity which may yet dwarf any of the hideous items on Jenkins's list. A huge observation tower is to be erected on the seafront near the rotting hulk of the West Pier. The i360, as it is known, will be funded by £36m of taxpayers' money. The Green administration will play banker in this risky process, and hopes to make money by charging more interest to the developer than it will have to pay back to the government. What could possibly go wrong?

The saga of this project has more twists than the helter skelter on the end of the Palace Pier. Marks Barfield, the firm behind the London Eye, expressed the desire to build an attraction on Brighton's seafront back in 2006. The plan was for a viewing platform that carries 200 people at a time up and down a 183 metre-high metal spike. Money from the paying public would generate much-needed investment for the shabby streets around the West Pier. But the recession put the frighteners on private backers' appetites.

Brighton's old West Pier is in danger of total collapse after recent storms. Photograph: Julia Claxton/Barcroft Media

In 2012, the Greens in charge of the city pulled a new deal out of the hat – the council would borrow £14m of funding from the government. The local enterprise partnership chipped in with a £3m loan, leaving Marks Barfield to find backers to come up with half the funding. Still no takers could be found, so the local authority has now borrowed £36m from the government – more than twice the amount previously agreed.

There are many traders and residents who regard this prospect as far more hair-raising than any view from a giant observation tower. Yet the policy was agreed by a committee of 10 councillors, with seven voting in favour and three voting against.

Only in the Alice in Wonderland world of Brighton's political scene could you find environmentalists teaming up with true-blue Tories to fund a tourist attraction paid for with public money which, if successful, will see the city flooded with emission-belching tourists and which, if it fails, will land the city's residents with an enormous bill.

We may one day discover what the English Channel looks like from the top of a stick outside the Hilton Metropole hotel. Right now, the view from here is anything but pretty.